(H.R. 5072) On an amendment to housing legislation that would have required homeowners receiving mortgages from private lenders participating in the federal government’s mortgage insurance program to make a 5% down payment on their home.

This was a vote on an amendment by Rep. Scott Garrett (R-NJ) to housing legislation that would have required homeowners receiving mortgages from private lenders participating in the federal government’s mortgage insurance program to make a 5% down payment on their home, as opposed to the 3.5% payment required under current law.

The federal government’s mortgage insurance program is run by the Federal Housing Authority (FHA), which was established during the Great Depression to make home ownership accessible and affordable for more Americans. It insures mortgages provided to homeowners by FHA-approved private lenders. The program is intended to shield private lenders participating in the program from losses that occur when homeowners default on their loans. The program is largely “self-sustaining” – meaning the taxpayers do not finance it. To keep the program solvent, the legislation raised premiums paid by homeowners receiving loans from FHA-approved lenders. Since the FHA is intended to help low-income individuals become homeowners, mortgage loans provided under the program require very little investment up front from the borrower. This amendment would require those borrowers to pay more when closing on a loan by requiring a 5% down payment on the home, as opposed to the 3.5% payment required under current law.

Garrett urged support for his amendment: “It's not a 20 percent down payment or 15 percent or even a 10 percent, which many private lenders right now require, but we go for the reasonable one, the compromise, 5 percent down payment. I support home owners as much as the next guy, and I want everybody to be able to afford their own home if they could. But we have to learn something from our past history, and we have to be responsible here in this House.”

Rep. Barney Frank (D-MA) argued that the amendment was unnecessary, because the FHA had already instituted more stringent requirements than those which Garret proposed: “…The FHA has gone beyond the gentleman from New Jersey with regard to borrowers who are risky. For borrowers with a 580 or below credit score, the FHA has already used the authority we have given them to raise the down payment to 10 percent…”

The House rejected the Garrett amendment by a vote of 131-289. 124 Republicans and 7 Democrats voted “yea.” 243 Democrats and 46 Republicans voted “nay.” As a result, the House rejected an amendment to housing legislation that would have required homeowners receiving mortgages from private lenders participating in the federal government’s mortgage insurance program to make a 5% down payment on their home, as opposed to the 3.5% payment required by current law.